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4 Tips for Passing the Entrepreneurial Torch

Family businesses go through unique challenges as they move from one life cycle to the next — and this is particularly true when it’s time to transition leadership.

It’s a topic I often discuss with my clients, and it was a big focus of conversations during the EY Strategic Growth Forum® 2013 in Palm Springs, California, where some of this country’s top family business leaders convened. Experience varied, but there’s one thing most everyone agreed on: rising family business leaders need support. And while you can’t create an entrepreneurial spark, you sure can fan the flame.

This sentiment mirrored findings from a recent study, which delves further into best practices in family business leadership transitions. Here are some key insights.

Engage the next generation early and often. From the time they are children, help your future leaders form an emotional connection to the business, the industry and your employees. Promote the understanding that the business is as important to your family and its history as each individual member.

Tell them your story. Make sure that future leaders understand your business’s roots, and not only the successes, but also the challenges you’ve faced as a family business leader. Talk to them about the value of entrepreneurship, and help them establish a positive and future-oriented view of the entrepreneurial tradition of your family.

Be a positive role model. Demonstrate your passion while modeling an entrepreneur’s work-life integration. Show them that a balance not only can be struck, but must be struck in order to truly achieve success.

Hand over the reins. John Mascaro, Chairman of Mascaro Construction Company, a second-generation firm, cites that it is important to give up control and allow future leaders to make mistakes.

source: iStock

“Entrepreneurship is about calculated risk, and my children, while they were going through a 10-year apprenticeship, were exposed to the calculated risk. You have to let your children make mistakes, and you let them learn from those mistakes. You have to give [control] up, otherwise they won’t learn.”

Generational change is, without a doubt, a highly complex, highly emotional process. And while it is very often a positive experience, the emotions that surface bring their own set of challenges.

Tell me: What steps have you taken to engage your family’s next generation of leaders? What’s worked for you … and if you could do it again, what would you do differently? If you’re a successor, what lessons did previous generations pass along, and how do you apply them?

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